(Adds health-care bill background in 12th paragraph.)
By Amy Thomson and Ian King
March 26 (Bloomberg) -- AT&T Inc. will book $1 billion in first-quarter costs related to the health-care law signed this week by President Barack Obama, the most of any U.S. company so far.
A change in the tax treatment of Medicare subsidies triggered the non-cash expense, and the company will consider changes to the benefits it offers current and retired workers, Dallas-based AT&T said today in a regulatory filing.
AT&T, the biggest U.S. phone company, joins Caterpillar Inc., AK Steel Holding Corp. and 3M Co. in recording non-cash expenses against earnings as a result of the law. Health-care costs may shave as much as $14 billion from U.S. corporate profits, according to an estimate by benefits consulting firm Towers Watson. AT&T employed about 281,000 people as of the end of January.
“Companies like AT&T, that have large employee bases, are going to have higher health-care costs and, therefore, lower earnings unless they can negotiate something or offer less to their employees,” said Chris Larsen, an analyst at Piper Jaffray & Co. in New York, who rates AT&T shares “overweight” and doesn’t own any himself.
AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees, who would otherwise be on a Medicare Part D plan. Under the new bill, AT&T will no longer be able to deduct that subsidy.
“As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health-care benefits offered by the company,” the carrier said in the filing.
3M Cost
AT&T’s announcement was followed about an hour later by 3M, the St. Paul, Minnesota-based maker of products ranging from Post-It Notes to respiratory masks. 3M said it expects a one-time expense of $85 million to $90 million after tax, or about 12 cents a share, in the first quarter because of the new law, according to a statement. 3M had about 75,000 employees as of Feb. 5.
Michael Coe, a spokesman for the carrier, declined to comment. Peter Thonis, a spokesman for Verizon Communications Inc., which also employs more than 200,000 people, declined to comment.
New York-based Verizon, the second-largest U.S. phone company, told employees in a note after the law was signed that the tax will make the subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”
AT&T rose 9 cents to $26.24 at 4 p.m. in New York Stock Exchange composite trading. The shares have fallen 6.4 percent this year.
Union Contracts
AT&T employees represented by the Communications Workers of America union have health benefits locked in via contracts that don’t expire until 2012 and 2013, Candice Johnson, a spokeswoman for the union, said in an interview. About 58 percent of the carrier’s workforce is represented by the union, AT&T said in a filing.
Obama signed the health-care reform policy into law on March 23 after a year of pushing the legislation through Congress without a single Republican vote. The new law will be phased in over several years and gives tens of millions of uninsured Americans health coverage. The bill, projected to cost almost $1 trillion, also calls for new taxes on the highest earners and fees on health-care companies.
Much of the public is still unsure about the plan with four in 10 Americans in favor of it, according to a Bloomberg National Poll. Obama is planning a follow-up campaign to sell the law -- the biggest change to the health system since Medicare was enacted in 1965 -- to the public.
--With reporting by Roger Runningen in Washington and Alex Nussbaum in New York. Editors: Lisa Wolfson, Stephen West
To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net; Amy Thomson in New York at athomson6@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net; Julie Alnwick at jalnwick@bloomberg.net

Under the 2003 Medicare prescription drug program, companies that provide prescription drug benefits for retirees have been able to receive subsidies covering 28 percent of eligible costs. But they could deduct the entire amount they spent on these drug benefits — including the subsidies — from their taxable income.

DAMNATION! Only being able to deduct the money you ACTUALLY spent! How's a poor trillion dollar corporation going to get by?!

Hypocrites who've posted about the evils of gov't. subsidies line up below.

The fact that you begin your post stating your desire to screw AT&T and you end your post with a sarcastic comment about a "poor trillion dollar corporation" tells us all we need to know about your mindset and motivation.

You're for the "little guy". I get that. There's nothing wrong with looking out for the little guy. But the interests of the "little guy" and everybody else are best served by a growing economy with (dare I say it) big, profitable corporations. When you declare war on big corporations you might as well be shooting yourself in the foot. THAT'S what liberals fail to understand, and that's what this bill does. We've been trying to tell the liberals that the numbers on this thing just don't add up and that it will SERIOUSLY impact the economy, and the liberals don't want to hear it. And now that companies are speaking out and estimating the impact of this idiotic legislation, you guys are in denial and insist that they MUST be lying.

The fact that you begin your post stating your desire to screw AT&T and you end your post with a sarcastic comment about a "poor trillion dollar corporation" tells us all we need to know about your mindset and motivation.

You're for the "little guy". I get that. There's nothing wrong with looking out for the little guy. But the interests of the "little guy" and everybody else are best served by a growing economy with (dare I say it) big, profitable corporations. When you declare war on big corporations you might as well be shooting yourself in the foot. THAT'S what liberals fail to understand.

Thats reality. Reality has little impact on the far left until they are the ones unemployed or in the case of college kids they graduate only to find out there are no jobs.

One thing happening on many discussion boards is that while the parry and thrust of right vs left back in the fall was pretty heated, it was all based on each sides theory and what they believed in. But since then this real world thing has hit and a lot of the Obama voters who were independents who bought the hope/change thing and a good number of young folks have started to see what they were being told.

Its easy to demonize corporations till you need a job or lose one. And its easy to throw stones at each other on proposals till they pass and the reality of the consequences begin to show up.

We are at a very dangerous tipping point in this economy and the moves of the administration are clearly seen by a large majority as wrong. As they push through more and ignore the voter further, we should expect a lot of heat to be generated.

__________________
Frazod to KC Nitwit..."Hey, I saw a picture of some dumpy bitch with a horrible ****tarded giant back tattoo and couldn't help but think of you." Simple, Pure, Perfect. 7/31/2013

Dave Lane: "I have donated more money to people in my life as an atheist that most churches ever will."

Shhh, there will be no new taxes of any form on the middle class. They will not suffer one bit.

__________________

Our society is run by insane people for insane objectives. I think we're being run by maniacs for maniacal ends and I think I'm liable to be put away as insane for expressing that. That's what's insane about it.

They'll get a chance to explain exactly where the money's going in three weeks.

AT&T, Deere CEOs Called by Waxman to Back Up Health-Bill Costs
March 27, 2010, 7:28 PM EDT

By Viola Gienger

March 27 (Bloomberg) -- Representative Henry Waxman called the chief executive officers of AT&T Inc., Verizon Communications Inc., Caterpillar Inc. and Deere & Co. to provide evidence to support costs the companies plan to book related to the new health-care law.

Waxman of California, chairman of the House Energy and Commerce Committee, and subcommittee Chairman Bart Stupak of Michigan released letters they wrote to the executives, saying their plans to record expenses against earnings as a result of the law contradict other estimates. The lawmakers requested the executives appear at hearing Stupak plans on April 21.

“The new law is designed to expand coverage and bring down costs, so your assertions are a matter of concern,” Waxman and Stupak, both Democrats, wrote in the letters yesterday. “They also appear to conflict with independent analyses.”

AT&T, the biggest U.S. phone company, is among employers that have announced plans to book costs related to the health- care law signed this week by President Barack Obama. The 10- year, $940-billion legislation is intended to cover 32 million uninsured Americans and provide benefits such as restricting premiums and ending the practice of denying coverage for pre- existing conditions.

Dallas-based AT&T said in a regulatory filing yesterday it would record $1 billion of costs, the most of any U.S. company so far.

AT&T previously received a tax-free benefit from the government to subsidize health-care costs for retirees. Under the new bill, AT&T will no longer be able to deduct that subsidy.

Tax Burden

“As a result of this legislation, including the additional tax burden, AT&T will be evaluating prospective changes to the active and retiree health-care benefits offered by the company,” the carrier said in the filing.

New York-based Verizon, the second-largest U.S. phone company, told employees in a note shortly after the law was signed that the tax will make a drug subsidy less valuable to employers like Verizon and so “may have significant implications for both retirees and employers.”

Moline, Illinois-based Deere, the world’s largest maker of farm machinery, said on March 25 that the new health-care law would increase its expenses by $150 million this fiscal year.

Peoria, Illinois-based Caterpillar, the world’s largest maker of bulldozers and excavators, expects to record a charge of about $100 million in the first quarter of 2010, reflecting new tax liabilities on retiree drug benefits.

No Charge at GE

General Electric Co., the world’s biggest maker of jet engines, power-plant turbines and locomotives, said today it doesn’t anticipate taking a charge tied to the health-care law.

GE, of Fairfield, Connecticut, doesn’t see any “material effect” from the law, spokeswoman Anne Eisele said today.

Waxman and Stupak said the Congressional Budget Office had reported that average premium costs per person would decrease as much as 3 percent by 2016 for companies insuring more than 50 employees. They also cited what they said was a November estimate by the Business Roundtable, an association of chief executive officers, of reduced health-insurance cost trends.

The lawmakers asked the companies to provide documents to the committee supporting their planned charges by April 9.

--With assistance from Amy Thomson and Will Daley in New York, Rachel Layne and Edmond Lococo in Boston and Ian King in San Francisco. Editors: Ann Hughey, Mark Rohner

By JAMES B. TREECE | AUTOMOTIVE NEWS
Imagine how much stronger General Motors would be if it launched three additional new-model programs every year, each costing about $1 billion.

It could, if it didn't have to pay for its retirees' health care.

That is one of the most fundamental differences between GM and Toyota Motor Corp. GM pays for the health care of 339,000 retirees - and the number grows every year. In contrast, Toyota pays for fewer than 3,000 retirees' health care in Japan, a number that remains fairly stable.

That difference gives Toyota and other Japanese carmakers a massive advantage over their American rivals.

"The cost of health care in the U.S. is making American businesses extremely uncompetitive vs. our global counterparts," says GM CEO Rick Wagoner.

Toyota and other Japanese carmakers benefit from a national health care plan that reduces its obligations to retirees to almost nothing.

Wagoner and other U.S. auto industry executives are increasingly vocal in seeking government action to address this competitive disadvantage. But Wagoner stops short of seeking a national solution as comprehensive as Japan's.

Day and night

A close look at the numbers at GM and Toyota shows diametrically different conditions.

About 1,200 of Toyota's Japanese employees will retire this year. Within two years, each will switch from the company-backed health insurance scheme to the national health plan. At that point, Toyota's spending on its retiree's health care drops to zero.

Toyota pays health care costs for its employees in Japan in the form of premiums for medical insurance. But it does not continue to pay those costs for retirees. Former employees of Nissan Motor Co. and Honda Motor Co. also turn to the Japanese government for health care coverage.

The American Big 3 pay - and pay and pay - for their retirees' health care.

GM covers the health care costs of approximately 125,000 active employees and 339,000 retirees. Health care costs for those retirees amounted to approximately $3.6 billion last year.

That's more than two-thirds of the $5.2 billion GM spent on health care and medical-insurance premiums last year. GM also contributed about $9 billion in 2004 to a trust fund set up to pay for health care costs.

The Chrysler group last year spent $1.3 billion on retirees' health care.

$1,525 per vehicle

GM says that its payments for retirees' health care - more than what the company spent for steel - add about $1,525 to the cost of every vehicle the company sells.

In contrast, Toyota must contribute to health insurance payments for only about 64,500 active workers in Japan.

Toyota's health care costs are so negligible that they aren't even a line item in the company's financial statements. Toyota benefits both from the Japanese national health plan's coverage of retirees' medical needs and from the way that plan is structured.

Health care is paid for through a combination of mandatory payroll deductions from employees and employers. The cost is spread equally among various employers. That means older companies with large numbers of retirees are not at a disadvantage compared to companies with fewer retirees.

GM argues that it pays for more than its own employees and retirees. Indirectly, it pays for the approximately 45 million Americans who do not have health insurance. That's because medical providers charge higher fees to those who are covered by insurance to compensate for those who are not covered.

Toyota does not pay extra taxes to fund the government health care plan. Corporate income tax rates in Japan and the United States are virtually identical at just below 42 percent.

Perhaps sensitive to comparisons, Toyota declined to say whether its total health care spending in Japan amounted to more or less than $10 million a year.

The difference represents a huge competitive disadvantage for GM. Money that must be spent on retirees' health care cannot be spent on developing new models, upgrading factory equipment or hiring the most sought-after designers.

"The impact of the health care burden is particularly frustrating, because over the past decade GM has made huge improvements in our operational competitiveness," Wagoner says. "We have some of the most productive plants in North America, including four of the top five, and our quality has improved dramatically."

Wagoner's plan

Wagoner stops short of calling for a national health plan.

He wants industry, government and labor to cooperate to find ways to hold down spiraling costs.

"We need to encourage access to affordable health care coverage for all our citizens," he says. GM then wouldn't have to pay indirectly for the uninsured.

He also wants to address so-called catastrophic health care costs, which account for 30 percent of all medical costs. He calls for a "comprehensive insurance model to better share these catastrophic costs among all consumers."

Most of all, he wants Americans to be smarter consumers of health care, choosing less expensive yet comparable medicines whenever possible. But that's unlikely, as long as Americans believe that someone else, whether an insurance company or the government, is picking up the tab.

There is no evidence that Japanese consumers are any savvier in their health care spending than Americans. But in Japan, it's the government picking up the tab for retirees. In America, GM retirees pass the bill to GM.

They'll get a chance to explain exactly where the money's going in three weeks.

AT&T, Deere CEOs Called by Waxman to Back Up Health-Bill Costs
March 27, 2010, 7:28 PM EDT

By Viola Gienger

March 27 (Bloomberg) -- Waxman and Stupak said the Congressional Budget Office had reported that average premium costs per person would decrease as much as 3 percent by 2016 for companies insuring more than 50 employees. They also cited what they said was a November estimate by the Business Roundtable, an association of chief executive officers, of reduced health-insurance cost trends.

The lawmakers asked the companies to provide documents to the committee supporting their planned charges by April 9.

--With assistance from Amy Thomson and Will Daley in New York, Rachel Layne and Edmond Lococo in Boston and Ian King in San Francisco. Editors: Ann Hughey, Mark Rohner

All kinds of people vote. Not enough of those people think highly enough of Trump to make him President but all kinds of people vote.

Quote:

Originally Posted by Donger

So, if they were polling better than Trump and the primary goal was to prevent Hillary from becoming POTUS, perhaps it would have been a better strategic decision to nominate someone who actually had a chance of beating her and preventing that than nominating Donald Trump.